Before us is a petition for review on certiorari under
Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the
Decision[1]
dated April 6, 2001 and the Resolution[2]
dated July 18, 2001 rendered by the Court of Appeals in CA-G.R. SP No. 58076, entitled
“Benedicto A. Cajucom VII vs. TPI Philippines Cement Corporation, TPI
Philippines Vinyl Corporation, Thun Tritasavit and the National Labor Relations
Commission.”

As a result of the economic slowdown then experienced in this
country, respondent TP Cement, having no viable projects, shortened its
corporate term from 50 years to 2 years and 7 months. In fact, it was
dissolved on January 27, 1998. With respect to respondent TP Vinyl, it shifted
its business from production to marketing and trading of Thai Petrochemical
products.

Thus, respondents implemented cost-cutting measures resulting in
the retrenchment or termination from the service of their employees, including
petitioner.

On December 3, 1998, respondents sent petitioner a notice
terminating his services effective December 30, 1998. Simultaneously,
respondents, on the same day, filed with the Department of Labor and Employment
(DOLE) an “Establishment Termination Report” of petitioner’s retrenchment from
the service. Petitioner contested respondents’ action, claiming that his
retrenchment was based erroneously on respondents’ probable losses, instead of
their actual, substantial and imminent
losses, as shown by the following: (1) an increase or raise in his monthly
salary from P70,000.00 in 1995 to P80,000.00 in 1996; (2) hiring
by respondents of more marketing and accounting employees for the period from
July 1997 to December 1998; (3) acquisition, in 1998, of a warehouse; and (4)
expansion in 1998 of their operations by including sales and marketing of oil
products. Petitioner further claimed that respondents were motivated by
revenge in terminating his services. This stemmed from his October 7, 1996
memorandum to respondents’ Executive Vice-President Thun Tritasavit, also a respondent
herein, questioning his financial transactions detrimental to respondents’
interests.

Eventually, or on January 12,
1999, petitioner filed with the Office of the Labor Arbiter a complaint for
illegal dismissal against respondents, docketed as NLRC-NCR Case No.
00-01-00485-99.

On March 31, 1999, the Labor
Arbiter rendered a Decision holding that respondents failed to adduce
sufficient evidence to show that their alleged losses are substantial and
imminent and concluded that petitioner was illegally dismissed from
employment. The dispositive portion of the Decision reads:

1. reinstate complainant Benedicto A. Cajucom VII to his former
position without loss of seniority rights and privileges with backwages of P240,000.00,
subject to adjustment upon actual reinstatement;

2. pay complainant moral and exemplary damages at P5,000,000.00.

SO ORDERED.”

Upon appeal, the National Labor Relations Commission (NLRC)
promulgated a Decision dated October 29, 1999 reversing the Labor Arbiter’s
Decision. In concluding that the termination from the service of petitioner is
justified, the NLRC held:

“The appeal is meritorious.

x x x

Respondents, as early as April 1996, began downsizing their
operations. More than a year after such initial cost cutting measure or on
September 1997, when they sensed a continuous business decline and difficulty
in implementing their projects, respondents decided to reduce their office
space by moving to a smaller and cheaper three-storey building at Bagtikan St.,
Makati City. This is to reduce rental costs. Respondents, sometime in April
1998, also reduced their office space from its original 725-square meter area
to 76 square meters. These changes are known to complainant.

Also known to complainant are the voluntary termination from the
service of the following: Accounting Manager on 30 September 1997; Marketing
Manager on 30 December 1997; and Executive Assistant on 15 March 1998. This is
also in line with the downsizing of respondents’ operations.

Complainant was even consulted legally. In fact, he vehemently
rejected the intention of respondents to fight the business crisis by avoiding
mass lay-offs, and slashing by 15% to 20% employees’ salaries.

Despite the downsizing of respondents’ group of companies, which
started as early as April 1996, they even increased the salary of complainant
from P70,000.00 to P80,000.00 effective June 1996. In order to
accommodate such increase, respondent Tritasavit agreed to deduct the same from
his own salary, thereby, reducing his (respondent Tritasavit’s) total monthly
salary and making it lower than that of complainant. This fact is also known
to complainant.

In addition to these measures being adopted by respondents, they
also sold some company vehicles and used the proceeds to meet their operational
expenses and pay their obligations.

We are convinced that respondents are suffering from substantial
losses and serious business reverses. The audited financial reports prepared by
Sycip Gorres Velayo and Co. show that as of 31 December 1997, TPI Philippines
Cement Corporation incurred losses at P12,375,166.00. After the start
of its business in June 1995, respondent, still having no economically-viable
projects in 1996, made use of its entire paid-in capital of P12,815,000.00
for operational and administrative expenses.

On the other hand, TPI Philippines Vinyl Corporation, as of 30 June
1998, suffered losses at P14,186,907.00, which, barely three (3) months
thereafter or as of 30 September 1998 increased to P15,236,103.00.
Initially, this company was incorporated purposely to engage in manufacturing
and trading of plastic raw materials, but due to continuous and worsening
economic situation, as shown by its financial trend, the same incurred a
deficit of P15,236,103.00, thus, prompting it to shift to marketing and
trading of TPI products or being a mere marketing arm of Thai Petrochemicals.

x x x

Respondent was in fact very honest to complainant by forewarning
him, a year in advance, of the possibility of his separation from the service,
should there be no changes in the economic condition, and by helping
complainant in seeking another job by referring him to other companies. These
acts of respondents, to us, are clear signs of good faith.

We are persuaded that retrenchment due to substantial losses has
been sufficiently established and that the dismissal of complainant pursuant to
Art. 283 of the Labor Code, was justified.

WHEREFORE, premises considered, judgment is hereby rendered SETTING
ASIDE the decision of the Labor Arbiter. However, respondents are ordered to
pay complainant his separation pay equivalent to one month salary per year of
service. Claims for moral and exemplary damages are hereby DISMISSED for utter
lack of merit.

SO ORDERED.”

Both parties filed a motion for reconsideration but it was denied
by the NLRC in a Resolution dated January 28, 2000.

Petitioner then filed a petition for certiorari with the
Court of Appeals alleging that the NLRC committed grave abuse of discretion in
finding that the termination of petitioner’s employment is justified.

On April 6, 2001, the Court of Appeals rendered the assailed
Decision affirming with modification the NLRC’s Decision in the sense that
respondents are also ordered to pay petitioner backwages from the time he was
dismissed “up to the time the dismissal is adjudged to be just,” thus:

“However, with respect to the monetary reward, we have to modify.

x x x

In the recent case of Serrano vs. NLRC, et al., the Supreme
Court abandoned the policy of just directing the employer to indemnify the
dismissed employees by imposing fines of varying amounts. In this landmark
case, the High Court enunciated that, should there be any just cause for
dismissing an employee under any of the causes enumerated in Art. 282 or any of
the authorized causes under Art. 283 of the Labor Code as amended, but there
was no prior notice or investigation, the remedy is to order the payment of
full backwages although his dismissal must be upheld. His termination should
not be considered void but he should simply be paid separation pay.

x x x

In their memorandum of appeal, private respondents alleged that on
November 27, 1998, respondent Tritasavit left, at petitioner’s desk, the letter
terminating him from the service. It was only on December 3, 1998 that
respondent Tritasavit conferred with petitioner regarding the notice of
termination. There is no proof that petitioner came to know of such
termination before the latter date. The mere act of leaving, on November 27,
1998, the same letter at petitioner’s table, is not sufficient notice, as
contemplated under the law.

Private respondents admitted that a notice of termination was
served upon the DOLE on December 3, 1998. This is again contrary to law. The
law requires that a written notice of retrenchment be filed with the DOLE one
month before the intended date of retrenchment. The requirement of the law
is very clear.

With respect to the payment of separation pay, Sec. 9 (b), Rule VI
of the New Rules of Procedure of the NLRC provides:

‘Sec. 9. x x x

(b) Where the termination of employment is due to
retrenchment to prevent losses and in case of closure or cessation of operations
of establishment or undertaking not due to serious business losses or financial
reverses, or where the employee suffers from a disease and his continued
employment is prohibited by law or is prejudicial to his health or to the
health of his co-employees, the employee shall be entitled to termination pay
equivalent to at least one-half month’s pay for every year of service, a
fraction of at least six months being considered as one whole year. (emphasis
ours.)

In the case at bar, public respondent awarded petitioner one month
salary pay per year of service as his separation pay. Although private
respondents filed a motion for partial reconsideration regarding the same, they
did not push through with it when it was denied by public respondent. Thus, the
same has become final.

WHEREFORE, in view of the foregoing, the decision of the public
respondent is AFFIRMED with modification that private respondents are ordered
to pay petitioner backwages from the time he was dismissed from work up to the
time the dismissal is adjudged to be just.

SO ORDERED.”

In a Resolution dated July 18, 2001, the Court of Appeals denied
petitioner’s motion for reconsideration.

In the instant petition, petitioner contends that the Court of
Appeals erred (1) in upholding, as lawful and valid, his retrenchment from
employment on the basis of respondents’ evidence; and (2) in not finding that
petitioner is entitled to an award of damages.

Section 1, Rule 45 of the Rules of Civil Procedure, as amended,
provides that only questions of law are entertained in appeals by certiorari
to the Supreme Court. However, jurisprudence has recognized several exceptions
in which factual issues may be resolved by this Court:[3] (1) the legal conclusions made by the
lower tribunal are speculative;[4]
(2) its inferences are manifestly mistaken,[5]
absurd or impossible; (3) the lower court committed grave abuse of discretion;
(4) the judgment is based on a misapprehension of facts;[6] (5) the findings of fact of the lower
tribunals are conflicting;[7]
(6) the Court of Appeals went beyond the issues; (7) the Court of Appeals’
findings are contrary to the admissions of the parties;[8] (8) the Court of Appeals manifestly
overlooked facts not disputed which, if considered, would justify a different
conclusion; (9) the findings of fact are conclusions without citation of the
specific evidence on which they are based; and (10) the findings of fact of the
Court of Appeals are premised on the absence of evidence but such findings are
contradicted by the evidence on record.[9]

Normally, the Supreme Court is not a trier of facts.[10] However, since the findings of fact
of the Labor Arbiter, on one hand, and the NLRC and the Court of Appeals, on
the other, are conflicting, we shall discuss our factual findings and our
determination of the main issue.

Retrenchment, under Article 283 of the Labor Code, as amended, is
recognized as an authorized cause for the dismissal of an employee from the
service. This article provides:

“Art. 283. Closure of Establishment and Reduction of Personnel.
– The employer may also terminate the employment of any employee due to the
installation of labor-saving devices, redundancy, retrenchment to prevent
losses or the closing or cessation of operations of the establishment or
undertaking unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the worker and the
Department of Labor and Employment, at least one (1) month before the intended
date thereof. x x x. In case of retrenchment to prevent losses and in
cases of closure or cessation of operations of the establishment or undertaking
not due to serious business losses or financial reverses, the separation pay
shall be equivalent to one (1) month pay or at least one-half (1/2) month pay
for every year of service, whichever is higher. A fraction of at least six (6)
months shall be considered as one (1) whole year.”

“To be valid, three requisites must concur, as provided in
Article 283 of the Labor Code, as amended, namely: (1) The retrenchment is
necessary to prevent losses and the same is proven; (2) Written
notice to the employees and to the DOLE at least one month prior to the
intended date thereof; and (3) Payment of separation pay equivalent
to one month pay or at least ½ month pay for every year of service, whichever
is higher.”

“x x x. We believe that the standard proof of a company’s financial
standing is its financial statements duly audited by independent and credible
external auditors. Financial statements audited by an independent external
auditor, as in the case at bar, constitute the normal method of proof of
profit and loss performance of a company.”

For his part, petitioner insists that actual, not probable
losses, justify retrenchment. Article 283 (quoted earlier) entails,
among others, only a situation where there is “retrenchment to prevent losses.”[14] The phrase “to prevent losses” means
that retrenchment or termination from the service of some employees is
authorized to be undertaken by the employer sometime before the losses
anticipated are actually sustained or realized.[15] This is the situation in the case at
bar. Evidently, actual losses need not set in prior to retrenchment.

As mandated by Article 283, the employer shall serve notice of
retrenchment to prevent losses on the worker and the DOLE at least one month
before the intended date thereof.

Records show that on December 3, 1998, respondents sent
petitioner and the DOLE separate notices of retrenchment effective December 30,
1998. Following the provision of Article 283, these notices should have
been served one month before, or on November 30, 1998. Clearly,
respondents failed to comply with the one-month notice requirement. On this
point, our ruling in Agabon vs.
National Labor Relations Commission,[16]
is relevant, thus:

“Procedurally, x x x (2) if the dismissal is based on authorized
causes under Articles 283 and 294, the employer must give the employee and the
Department of Labor and Employment written notices 30 days prior to the
effectivity of his separation.

From the foregoing rules four possible situations may be derived:
(1) the dismissal is for a just cause under Article 282 of the Labor Code, for
an authorized cause under Article 283, or for health reasons under Article 284,
and due process was observed; (2) the dismissal is without just or authorized
cause but due process was observed; (3) the dismissal is without just or
authorized cause and there was no due process; and (4) the dismissal is forjust or authorized cause but due process was not observed.
(emphasis supplied).

x x x x
x x

In the fourth situation, the dismissal should be upheld. While
the procedural infirmity cannot be cured, it should not invalidate the
dismissal. However, employer should be held liable for non-compliance with
the procedural requirements of due process.

x x x x
x x

The violation of the petitioners’ right to statutory due process
by the private respondent warrants the payment of indemnity in the form of
nominal damages. The amount of such damages is addressed to the sound
discretion of the court, taking into account the relevant circumstances.
Considering the prevailing circumstances in the case at bar, we deem it proper
to fix it at P30,000.00. We believe this form of damages would serve to
deter employers from future violations of the statutory due process rights of
employees. At the very least, it provides a vindication or recognition of this
fundamental right granted to the latter under the Labor Code and its
Implementing Rules.”

Considering that petitioner was separated from the service due to
an authorized cause but that respondents did not comply with the one-month
notice requirement, petitioner is entitled to an award of nominal damages which
we fix at P20,000.00.

It bears reiterating that under Article 283, petitioner is
entitled to an award of separation pay equivalent to one-half (1/2) month’s
pay for every year of service (with a fraction of at least six (6) months
considered one (1) whole year). Since he had been employed for four (4) years,
or from June 1, 1995 to December 30, 1998, with a monthly salary of P80,000.00,
he should be paid P160,000.00 as separation pay.

WHEREFORE, the petition is party GRANTED. The challenged
Decision and the Resolution of the Court of Appeals in CA-G.R. SP No. 58076 are
AFFIRMED with MODIFICATION in the sense that respondents are hereby ordered to
pay petitioner (1) P160,000.00 as separation pay; and (2) P20,000.00
as nominal damages. No costs.